Motor losses a drag on general insurers
While life insurers are befitting from the change in reserve requirements, leading to higher investment income, general insurers saw a fall off in earnings for the quarter ended March, according to data from the Financial Services Commission (FSC).
There are 10 general insurance companies in operation, overseeing assets of $72 billion.
The six life insurers hold assets of $292 billion. For them, a reduction in minimum capital ratios, means they have more resources available for investment.
In the March quarter, general insurers experienced a 49 per cent reduction in net income after tax to $400 million. Life insurers net income rose to $5 billion, compared to $3.1 billion at March 2016.
Garth Rowe, chairman of the finance committee-general insurance, at the Insurance Association of Jamaica, confirmed the downswing in underwriting results for general insurers on Thursday.
"The general sector's under-writing income grew by seven per cent, while the underwriting expenses increased 10 per cent resulting in a $130 million deterioration in net underwriting results," Rowe told Gleaner Business.
EYES ON INVESTMENT INCOME
"The sector's ability to deliver a positive return on equity continues to rely on the extent to which it can earn investment income," he said.
During the quarter, investment and other income grew by $110 million, partially offsetting the underwriting loss.
He said also that cost of claims continues to increase fuelled, primarily by motor business which recorded losses of $2.4 billion in the quarter, amid a significant 12 per cent in operating expenses.
The FSC data shows that up to March, general insurers' assets of $72 billion outpaced liabilities of nearly $46 million.
For the quarter, total revenue amounted to $5.3 billion, up six per cent relative to $5 of inflows recorded in the March 2016 quarter.
For the life sector, revenue grew 8 per cent to $19.5 billion. The FSC said the increase of $1.5 billion in total revenue for the life market was mainly driven by a 13.5 per cent increase in net premium earned.